Cost Efficiency and CO2 Emission Reduction in Short Sea Shipping: Evidence from Ciwandan Port–Panjang Port Routes, Indonesia

Abstract

Merak Port of Java and Bakauheni Port of Sumatera are connected by ferry lines. However, the number of ferry ships and facilities of the two ports are not able to accommodate the number of vehicles that cross. Queues of vehicles often occur and waiting times at the port are very high and have an impact on the accumulation of vehicles on the road to the port. Anticipating these conditions, it is possible to open a short sea shipping (SSS) route from Ciwandan port to Panjang port as an alternative route for shifting some of the vehicles served by those ferry ships. This research aims to analyze the efficiency of opening the Ciwandan–Panjang SSS route in terms of benefits for stakeholders, cost efficiency for vehicle users, and the potential for CO2 reduction from exhaust gases. We use a descriptive quantitative method. The analytical techniques used include port cost analysis, benefit analysis (for the government and ship operators), comparative analysis of transportation costs, and analysis of the impact of reducing CO2 emissions, which are valued monetarily. The results of the analysis show that the operation of the Ciwandan–Panjang SSS can reduce the total cost of vehicles compared to the Merak–Bakuheni route. Owners of cargo vehicles are able to save on logistics costs of IDR 332 billion per year. Estimated state revenue through non-tax state revenues (NTSI) and value-added tax (VAT) is increased. Losses due to CO2 emissions are estimated to be reduced, with a value of up to IDR 511 billion per year.